The European currency recovered a bit from the yearly lows during yesterday’s session but the US dollar remains firm ahead of tomorrow’s very important FOMC meeting. The Fed is expected to cut interest rates by 25bps following a better-than-expected US Q2 GDP, which diminished the odds of a 50bps rate cut. Lately, Germany has been releasing weak macroeconomic data as the country is on the brink of recession, if this trend continues today when it releases the GFK Consumer Confidence Survey and July’s CPI numbers, then we expect further losses on the Single currency. The US, on the other hand, will publish the core PCE price index, which is the Fed’s favorite inflation reading, a better-than-anticipated number should give the US Dollar an edge ahead of the central bank’s announcement.
The Single currency remains in consolidation between 1.1150 and 1.11 levels as traders remain cautious ahead of tomorrow’s major Fed announcement. We expect the price to remain trading in the same range until tomorrow with no major breakouts. However, if the bulls or the bears decide to start the breakout from today, then the key level to watch for the buyers is 1.1185 and for the sellers is the yearly low 1.1107.
Support: 1.1107 / 1.1050
Resistance: 1.1150 / 1.1185